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(Kitco News) - Comex gold futures prices are moderately higher in early U.S. trading Wednesday, as traders and investors are stepping in to buy the recent big dip in prices. Demand for physical gold worldwide remains strong after last week’s price plunge. Outside market forces are also in a mildly bullish posture for gold and silver Wednesday, as the U.S. dollar index is weaker and crude oil prices are firmer. June Comex gold last traded up $13.80 at $1,422.40 an ounce. Spot gold was last quoted up $9.40 at $1,423.50. May Comex silver last traded up $0.178 at $22.995 an ounce.

Strong demand for physical gold worldwide, and especially from Asia, continues to underpin the gold market as investors do some perceived bargain hunting after the recent large price decline in the metal. Reports this week have said there are shortages of gold bars and coins in some countries, with gold retailers jacking up their charged premiums over the spot price of gold.

There is also scattered talk in the market place that there is a significant “short squeeze” occurring in the gold futures market at present. This phenomenon occurs when short sellers are well “under water” and are forced to buy back losing positions at a much higher price, as they are squeezed out of the market.

In overnight news, German 30-year bund yields fell to a record low at a government auction Wednesday. The bund fetched an average yield of 2.16%. This underscores the still-keen European investor uncertainty regarding the overall financial and economic health of the European Union. The German Ifo business confidence index fell to 104.4 in April from 106.7 in March, suggesting the EU’s largest economy is struggling. Still, the Euro currency was stronger and Italian and Spanish bond yields hovered near two-year lows Wednesday, while European stock markets were higher. This hints European investors and traders reckon the European Central Bank will keep its monetary policy very easy for the foreseeable future.

The continued weakness in the Japanese yen pushed the Nikkei stock index to a four-plus-year high Wednesday. The Bank of Japan is also on a very aggressive “easy money” path.

The U.S. dollar index is modestly lower Wednesday morning but did hit a three-week high overnight. The greenback bulls still have the overall near-term technical advantage. Meantime, Nymex crude oil futures prices are firmer Wednesday on short covering. Crude oil bears still have the slight overall near-term technical advantage.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the advance report on durable goods, and the weekly DOE liquid energy stocks report.

The London A.M. gold fix is $1,424.50 versus the previous P.M. fixing of $1,408.00.

Technically, June gold futures bears still have the overall technical advantage. However, the bulls are working to repair some of that chart damage and stabilize the market, to begin to suggest that a near-term market low is in place. But gold bulls still have very heavy lifting to do to suggest prices can sustain a near-term uptrend on the chart. Gold prices are still in a 6.5-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,450.00. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at $1,400.00. First resistance is seen at the overnight high of $1,429.50 and then at this week’s high of $1,438.80. First support is seen at the overnight low of $1,411.50 and then at this week’s low of $1,403.50.

May silver futures bears are in firm technical command. Silver prices are in a 6.5-month-old downtrend on the daily bar chart. A bearish pennant pattern has formed on the daily bar chart for silver. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $22.00. First resistance is seen at the overnight high of $23.325 and then at this week’s high of $23.65. Next support is seen at the overnight low of $22.81 and then at this week’s low of $22.555.

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